HK's Yam eventually sees yuan as third global currency

Hong Kong should review its US dollar peg and consider linking its currency to the renminbi, according to Joseph Yam, former head of the Hong Kong Monetary Authority.

The rise of the euro and China's yuan will likely spell the end of the US dollar's dominance of the global financial system by 2025, a World Bank study released Tuesday concludes.But it also said the the International Monetary Fund's basket-based pseudo-currency, the SDR or special drawing right, could also gain weight as countries and businesses seek to reduce the risk of foreign-exchange shifts.

Mercenary Trader has maintained a bullish stance on the $USD for weeks, as first highlighted in the August 12th global macro notes. We have also maintained a corresponding bearish stance on the euro.

Marc Chandler submits:There will not be a statement after this weekend's G7 meeting, but officials will likely take to the microphones and wax on global developments and their pet issues. Host Canadian Finance Minister Flaherty says that foreign exchange issues will be discussed, but this seems to be normally the case, especially given that central banks will be represented.It was up to Japanese Finance Minister Kan to provide a specifics. He said that the Chinese yuan may be debated.Really? Debated?

I really can’t figure out which currency is something I would want to hold if I had the option. It doesn’t really matter, since I am not going to act on it in a very direct way (maybe if I felt very strongly I would do something but it would probably be pretty limited), but I still keep thinking about this issue out of curiosity.

Dr. Stephen Leeb submits:The big news this past weekend was China's decision to let its currency, the yuan, trade with more “flexibility” - in other words, higher. As you know, we've been expecting such a move for some time, but with more dread than optimism. Nonetheless, this slight change is no reason to panic.